Posted on 07/14/2022 10:44:15 AM PDT by Red Badger
The jobs report and minutes from the Federal Reserve’s June meeting were the economic highlights of the week, but they are, respectively, a lagging indicator and old news. This column instead digs into the auto market, where there is an underappreciated ticking time bomb. Lucky Lopez is a car dealer who has been in the business for about 20 years.
In recent meetings with bankers, where he bids on repossessed vehicles before they go to auction, he has noticed some common characteristics of the defaulted loans. Most of the loans on recently repossessed cars originated during 2020 and 2021, whereas origination dates are normally scattered because people fall on hard times at different times; loan-to-value ratios, or the amount financed relative to the value of the vehicle, are around 140%, versus a more normal 80%; and many of the loans were extended to buyers who had temporary pops in income during the pandemic.
Those monthly incomes fell—sometimes by half—as pandemic stimulus programs stopped, and now they look even worse on an inflation-adjusted basis and as the prices of basics in particular are climbing.
(Excerpt) Read more at barrons.com ...
Fortunately, my used car (a 2016 Scion iM) is now full paid off and I recently got the title to the car. I could sell it right now for close to US$19,000.
I guess the moral of the story is only buy what you can afford....
And likely they have the key fob codes as well so they can simply unlock them and drive them away. Don't even need a tow truck.
When we go to self-driving cars, they will just drive themselves back to the leasing company.
Well, there's certainly no denying that.
A very charty chart indeed.
I tried reading the full article, but I have to be a Barron's subscriber to see all of it.
Perhaps you have some insight?
My point being, and I don't think you can dispute this part, is that with used car prices exploding, the value of a used car is higher than normal and a finance company doesn't stand to lose any money by repossessing a vehicle and selling it on the wholesale market.
In past recessions, the value of used vehicles plummeted which meant that a repossession would more likely lose money for the finance company.
Stolen cars usually get parted out...................
I didn’t sign in to read the article, but the average price of used cars could be higher because new cars are being repossessed lowering the average age of the used car market. I was always leery about buying a repossessed car because I wasn’t sure how well it had been maintained on oil changes.
And I forgot. Harry Dean Stanton too
“most leased cars and trucks now have a HIDDEN GPS system in them so that the lender can find and REPO the vehicle”
That should be used by the police to locate stolen cars.
I can just see his TV ad: "Feeling Lucky? Tell ya what I'm gonna do!"
They prevented landlords from evicting tenants. They plan to reimburse college tuition. They fired people for not being vaxxed. I wouldn’t be surprised if the next big thing they do to interfere with the free market is declare a “moratorium” on car repossessions.
I see so many Rovers and Porsces and BMW suvs and Audis now. These people have bought waaay over their heads. Eff em. And the dealers too. Dealers are crooks. Every one. Eff em.
We are waiting for the earth-shattering kaboom to buy a truck.
I miss Carson; thanks...
Repo man’s always intense.
You may be waiting a while.........
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